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Japanese stock market index Nikkei breaks record from 1989

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The Nikkei index on the Tokyo stock exchange reached a new record level on Thursday. The Japanese main index ended 2.2 percent higher at 39,098.68 points, surpassing the old record from 1989.

Between 1985 and 1989, the Nikkei nearly quadrupled in value, with stock prices supported by low interest rates. Real estate prices also rose enormously. Thanks to high profits and a strong Japanese yen, Japanese companies also went on a buying spree abroad, with Sony taking over the film studio Columbia Pictures and Mitsubishi buying the famous Rockefeller Center in New York.

But in the early 1990s there was a massive crash on the Japanese stock market, with the Nikkei approximately halving in value in 1990 and real estate prices falling even further when the Bank of Japan began raising interest rates. This heralded Japan’s “lost decades,” with economic stagnation, deflation and rising government debt.

In recent months, the Nikkei, like other stock markets around the world, has shown strong price increases. In Japan, stock prices are also boosted by the low interest rates in the country. The Bank of Japan is the only central bank in the world that has not yet raised interest rates and continues to maintain negative interest rates to stimulate the country’s economy. On Thursday, the Nikkei received an extra boost from excellent results from the American chipmaker Nvidia.

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